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Petitioner: ZAHID HUSSAIN VS Respondent: GOVERNMENT OF SINDH through Secretary, Local Government and Rural Department and 5 others
Court Name: Sindh High Court Judge(s): Wajihuddin Ahmed Title:ZAHID HUSSAIN vs GOVERNMENT OF SINDH through Secretary, Local
Government and Rural Department and 5 others Case No.: Civil Suit No, 460 and C.M.A. No, 3911 of 1992 Date of Judgment:1992-08-09 Reported As: 1992 CLC 2396 Result: Order accordingly Judgment ORDER ' The suit from which CMA 3911/92, under Order 39, Rules 1 and 2, CPC, arises is for Declaration and Permanent Injunction. Subject-matter of the dispute is the Octroi Collection Contract for the year 1992-93 pertaining to the Union Council, Landhi, defendant No,4 in the suit. The plaintiff, who is an octroi contractor and was allegedly granted the aforesaid contract on 24-6-1992 maintains that such was lawfully awarded by the defendant No,4 and that a subsequent contract for the same rights, concluded under order of the defendant No,2, Ahinad Maqsood Hameedi, Additional Chief Secretary, Government of Sindh with the defendant No,3, another similar contractor, is contrary to law. Consequential relief of restraint is sought against the defendants from interfering with plaintiff's possession and/or cancelling the aforesaid contract dated 24-6-1992. Serious allegations of mala fides have been levelled by the plaintiff and the Chairman of the defendant No,4--council against the defendants Nos.2 and 3 and correspondingly by the defendants Nos. 1 to 3 against the plaintiff and the Chairman of Union Council. It should be in place now to detail the background and the various ingredients of the controversy, which have given rise to this suit and, in turn, the application for grant of interim relief. ' Contract similar to that in the suit for the year 1991-92 for an annual payment of Rs,18,03,000 was awarded to the plaintiff through a public auction. There have been intervening disputes and resulting litigation, the contract being unacceptable to the higher ups in the Government of Sindh and the plaintiff surviving, the Landhi Union Committee supporting his case, through orders passed in the Constitutional jurisdiction of this Court. Reverting to the current Octroi contract for the year 1992-93, the reserve price was fixed at Rs,24,46,671 and the auction was advertised in dailies Dawn
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and Jang on 10-4-1992. However, a directive through teleprinter message, dated 18-4-1992, was issued by the defendant No,2 to the Director, Local Government, Hyderabad/Sukkur/Larkana, maintaining that a new policy for awarding of various contracts/taxes for the year 1992-93 levied by the Local Councils in Sindh was being framed and requiring that all such auctions for collection of octroi/taxes etc. Be held in abeyance till 5-5-1992. On 5-5-1992 the defendant No,2 issued the policy document which, inter alia, enjoined all Town Committees and Union Councils to submit auction papers in respect of octroi/tax collection rights beginning 1992-93 onwards to the Government of Sindh through the channel of the Assistant. Director, Local Government and the Director, Local Government successively. It was also, relevantly, required that physical possession of the areas should not be handed over to the contractors without confirmation orders of the Government. All auction proceedings were required to be finalised by June 15, 1992, presumably because such contracts are to go into effect on July 1, each year. Consequently the notified auction dates in dailies Dawn and Jung of April 10, 1992, having been thus superseded, fresh dates in the same dailies on 13-5.1992 and 14-5-1992 were advertised. Now the three successive dates of auction were 26-5-1992, 30.5-1992 and 3-6-1992. It is an admitted position that nothing transpired on the said first two dates and the auction, in effect, took place on 3-6-1992. In the minutes of the Landhi Union Council meeting dated 3-6-1992 the offers received are recorded in this order: {{TABLE}} S.No, Name of Party Maximum bid Zahid Hussain Shah Rs, 35,05,000.00 (Plaintiff) Muhammad Hussain Rs,2,12,00,000.00 (Defendant No,6) Ghulam Jilani Rs,3,15,45,000.00 (Defendant No,5) 04 Muhammad Saleem Rs,5,51,00,000.00 (Successful bidder) Muhammad Ayoob Baluch Rs,5,50,00,000.00 (2nd highest bidder) Soofan Das Rs,1,61,41,000.00 (Defendant No,3) Nisar Ahmad Rs, 40,00,000.00 Muhammad Aslam Rs, 66,10,000.00 Abdul Hussain Rs, 61,00,000.00 Abdullah Nil Maqbool Ahmad Rs,61,62,000.00 (Words in brackets inserted here. Name of the plaintiff, the lowest bidder, at the top and that of the highest bidder in the middle defies comprehension) ' Strangely, as Mr. Abdul Hafeez Pirzada has highlighted, in the same minutes the Union Council virtually expresses its indignation on the high bids received, as above, and maintains that the object could be none other than to destroy the reputation of the Council nay, even more, to paralyse its working. Even so, it was hesitatingly decided that the highest bidder should be required to deposit 10% of the bid money, which if deposited he should be recommended for confirmation to the Government but upon failure similar procedure should be followed as regards the next two highest bidders. However, in case all three of such bidders failed the Council should conclude the requisite contract with another suitable person. There is an obvious catch here because, in the last eventuality, neither the remaining bidders were to be resorted to in the order of merit or otherwise nor even a fresh auction conceived, the Council apparently opting for a negotiated outlet. Section
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45(4) of the Sindh Local Government Ordinance, 1979, mandatorily requires processing of virtually all contracts through open auctions, only second proviso to that subsection relaxing the condition as to auction with the approval of the Government. Now, it is the case of the plaintiff that all three of the higher bidders failed and in the ordinary course the defendant No,4--Union Council concluded due contract with the plaintiff in the sum of Rs,35,05,000 equivalent to plaintiff's bid at the auction and due decision in that behalf was taken in the Council meeting held on 22-6-1992. Such contract, according to the plaintiff, has been acted upon and possession stands handed over in furtherance thereof. However, during the -course of time it is urged by Mr, Sharaf Faridi for the plaintiff that the defendant No,3, Soofandas, who is a brother-in- law of Bhagwandas, M.NA., the latter -allegedly on friendly terms with the present incumbent of the office of the Additional Chief Secretary, Government of Sindh, defendant No,2 here, approached that defendant, sued by name, and in a clandestine and highhanded manner allegedly obtained the same contract under unlawful orders of the defendant No,2 without so much as hearing of the plaintiff or even cancelling his lawful contract, which has also been acted upon. On the other hand, Mr. Abdul Hafeez Pirzada, who represents the defendant No,3, Soofan Das, denying any malice or illegality, allegedly attaching to the contract of the defendant No,3 urges that it is absolutely incorrect that all the three highest bidders in the order of merit had failed and that the defendant No,4--Union Council itself with its own counter-affidavit has appended a letter of the third highest bidder, informing that he had not received any notice, claiming a copy of the purported relevant letter dated 17-6-1992 and expressing his willingness to abide by his bid in the sum of Rs,3,15,45,000. ' The matter is fraught with allegations and counter-allegations, many of those, apparently, not without substance and predictably unpalatable, more so hurled, as they are, from all directions and affecting, as they do, public officers, who should always endeavour and ensure to remain above board and beyond reproach. By way of sequence of events, leading up to the disputes in this suit, on the score of mala fides, reliance from the plaintiffs side is placed on a summary dated 24.6-1991 put up by the Additional Chief Secretary in relation to the same contract for the preceding year 1991-92, where the contract had been knocked down in favour of the present plaintiff in the sum of Rs,18,03,000 but on a subsequent offer of M/s. Golden Traders, which had not participated in the auction, in the sum of Rs,25,00,000 the Additional Chief Secretary, superseding plaintiff's contract, had recommended reauction (in the referred summary). It is alleged that Bhagwandas, a sitting M.NA., had Interest in the said firm of Golden Traders and that the Additional Chief Secretary, defendant No,2 here, has been on friendly terms with him, lending a helping hand in the latter's business exploits, which on account of Constitutional constraints a people's representative could not directly undertake, The Additional Chief Secretary denies mala fides but admits acquaintance with the M.NA., urging that as a public representative the latter has been maintaining contact with aim. In such a situation, it was the dw; of the Additional Chief Secretary, to ensure that nothing was done at his end which had even the remotest tendency of creating any doubts about his own integrity .Anyway, the recommendation in the summary, per order of the Minister, Local Government dated 2-7-1991 was declined and the highest bid of the plaintiff was maintained. In the meantime, the plaintiff rushed to this Court and, upon instituting Constitutional. Petition No, D-702/1991, obtained an ad interim order of stay. Allegedly, during the pendency of the petition another summary dated 4-7-1991 was prepared by the Additional Chief Secretary and placed before the same Minister on the ground that the auction in favour of the plaintiff was manipulated and the council was short of funds, whereupon the concerned Minister agreed to a reauction. All this, in turn, is said to have led to contempt proceedings and the plaintiff, meanwhile, has performed his contract, which has run out its course by efflux, the petition itself being reserved for final orders. It will be improper to express any opinion on this subject, the matter still being sub judice. Another episode on which the allegations of mala fides rest pertains to a similar contract
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said to have been awarded to the plaintiff by the Union Council Darsano Channo. There too the minority M.NA., in question, allegedly, intervened with the support and assistance of the Additional Chief Secretary, the plaintiff being pushed to filing Constituonal Petition No, D-793/1991 which was allowed on 6-2-1992, the Supreme Court Leave Petition failing for not being pressed. Then follows the current contract. All that need be said here is that there was a history of tussels between private parties and the concerned public functionaries should have tread the ground with caution; whereas to ensure maximum lawful revenue was a duty cast, not only to remain but also seem to remain totally impartial and just in the process was equally important. ' It is next maintained from the side of the plaintiff that, after the plaintiff had entered into ,a formal contract on 24-6-1992 and possession had been passed on to him (plaintiff, in fact, was already in possession under the previous contract), the defendant No3, Soofan Das, somewhere in July, 1992, approached that. Defendant No,2 and claimed that his bid of Rs,1,61,41,000 be accepted. In the meantime, apparently the last named defendant "through a telephonic message dated 16.6-1992" had already required a report from the Director, Local Government, who in turn, obtained the factual position in writing together with a copy of minutes of the Council meeting of 3-6-1992 from the Chairman of the defendant No,4--Union Council and submitted his own report on the same date (17-6-1992), saying that the matter, upon failure of the highest bidder to come forward, would be taken up before the council in its meeting scheduled for 22-6-1992. There is, however, no explanation as to why such a wide time-lag between 3rd and 22nd June, 1992 was being allowed and why all the auction-bidders and even other prospective persons were not being tapped, if a negotiated contract on the best terms was being opted for. Both time and substance were important as the contract was to commence on July 1, 1992. Mr. Abbas All for the Council counters by urging that the defendant No2 Additional Chief Secretary was a contributory to delay as the first proposed auction was superseded on the pretext of issuance of a fresh policy from 18-4-1992 to 5- 5-1992. No doubt this kind of policy decision should have been. Taken sufficiently in advance but conduct on the part of the council cannot be washed clean because of another administrative lapse at another level. Besides, there is no reply from the council as to why all available avenues for the best possible contract were not being explored. Reverting to the sequence of events, on 24-6- 1992 a letter was addressed by the Director, Local Government to the Chairman, Landhi Union Council, to hold off its hands till further directives of the Government. While Mr. Sharaf Faridi, for the plaintiff reads the foregoing steps, claimed to be at the instance of the defendant No,2, as preliminaries to benefit the defendant No,3, Sofan Das, allegedly a surrogate of Bhagwandas M.NA. Mr. Abdul Hafeez Pirzada, Advocate, for the defendant No,3, points out that the Chairman of the Council,- in collusion with the plaintiff, has manipulated to conclude the contract with the plaintiff on 24-6-1992, which included issuance of letter dated 23-6-1992 to him, payment of 10% security deposit, 1% call money etc. Form alisation and-execution of the conti act all managed on the same date viz. 24-6-1992, the Government letter of even date reaching the council on 25-6-1992. Learned counsel for the defendant No,3 has contended that the fate of the contract favouring the plaintiff was preconceived and predestined as the machinations in the council meetings of 3-6-1992 and 22-6-1992 would make manifest in each one of which the council under a command performance from its Chairman expressed skepticism about the allegedly high bids, paving way for the plaintiff to secure the contractual rights for a song. There could be substance in this. Be that as it may, acting on the July, 1992:representative of Soofan Das, without hearing the plaintiff and without referring to any other rights in the matter the Additional Chief Secretary, Local Government, the defendant No,2 herein, through a Section Officer per letter dated 7-7-1992 addressed to the Director, Local Government ordered as under :- "Award of Octroi Contract of Union Council Landhi Karachi East for the year 1992-93 is hereby confirmed in the sum of Rs,1,61,40,000 (Rupees one crone sixty-one lacs and forty thousand only) in
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favour of Mr. Soofan Das, subject to payment of Security deposit of 10% of the bid." ' This was preceded by a note on the application of Soofan Das in the hand of the Additional Chief Secretary whereupon, on obtaining a report from the Secretary of the Council, the Director, Local Government, on the very date viz. 6-7-1992 had informed the Additional Chief Secretary that a contract with the plaintiff had stood concluded on 24-6-1992. As if the order dated 7-7-1992 was not enough, because the Chairman of the council was not to be found and its Secretary was allege'M not to be trusted (See the Secretary's letter dated 8-7-1992) the defendant No,2 upgraded the Secretary's .Post, suspended the incumbent and appointed another officer in his place, who dutifully hastened to execute the contract with Soofan Das on 8-7-1992 itself, giving rise to this suit and resulting in the grit of an ad, interim stay by a learned Judge of this Court on 9-7-1992, which operates till fruther orders. Mr. Sharaf Faridi has throughout contented that the foregoing facts by themselves indicate manifest mala fides and total disregard of norms and law. Enough has already been said, as to how public officers should act. I see patent inactivity on the part of the defendants Nos. 1 and 2 between 17-6-1992 and 24-6-1992 and then from 24-6-1992 to 6-7-1992 and subsequently indecent haste on the undated application of Soofan Das of July, 1992 when everything came to be cramped between July 6 and July 8, 1992. ' For, themselves the defendants Nos. 1 and 2 urge that the Chairman of the Union Council is in league with the plaintifff and public revenue is the casualty in the process. That public revenue has suffered there can be no doubt about. Minutes of the Budget Session of the Council of 28-6-1992 show that the income of the council is no more than Rs,41,24,000 and the revenue could be much more only if official obligations had been discharged with single-minded devotion. ' On the other hand, the Chairman of the Council, inter alia, has this to say in his defence: ' it is only due to Mr. Bhagwandas MNA's contacts, with the defendant No/ that defendant No/ ordered in favour of Soofan Das it will not be out of place to mention here that entire transaction of award of contract to defendant No,3 by defendant No,2 was completed on one date i,e. 8-7-1992 On 3-6-1992 on the date of auction Mr. Bhagwandas Chawla also came in the auction in car - having a plate of MNA. To prove that Mr. Ghulam Jilani and Soofan Das have business relationship with Mr. Bhagwandas, MNA the office address of these two are material I have acted in accordance with the resolutions of the council? ' Lengthy arguments from all sides have been heard on the application for grant of interim relief. ' Learned counsel for the plaintiff has contended that the plaintiff has been granted the contract in the suit in the best public interest, that the chairman of the defendant No,4-council, who alone could have, under the rules, executed the disposition has done so, that the contract dated 8-7-1992 executed under the orders of the defendant No,2 is bad because a secretw the council even if competently appointed could not execute such a contract so as to bind the council and above all in awarding the contract to the defendant No,3 neither the plaintiff nor the council has been heard nor even the plaintiff's contract has been cancelled, the Council Resolution authorising plaintiff's contract remaining intact to date. Mr. K.M. Nadeem AA.-G, representing the defendants Nos. 1 and 2, has urged that such defendants have acted to safeguard the best interests of the State and there is no illegality in any thing that the defendants have done. Mr. Abdul Itafeez Pirzada for the defendant No,3 has maintained that the contract in favour of the plaintiff is a void transaction, concluded fraudulently and did not require to be cancelled and the defendant No,3 who was a genuine participant in the auction has rightly been accorded the contract, having never resiled from his auction bid and never even taken away his initial deposit, such deposits of the two highest bidders having been forfeited upon default that of the third high bidder remaining with the council and all the rest, including the plaintiff having withdrawn the same following upon failure in the auction. Further, the learned counsel has urged that a plaintiff must succeed on the strength of his own case and not on account of any supposed infirmity in the defence. According to the learned
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counsel irrespective of merits in the controversy this is not a case fit for confirmation of the ad interim injunction. The defendant No,5, Ghulam Jilani, the third highest bidder, who has appeared in person seems to be following a wait and watch policy . The defendant No,6, who is the fourth highest bidder and has instituted Constitutional Petition No,D-17.34/92, has submitted a statement, appending a true copy of such memo. Of petition and indicating that he is willing to abide with his bid recorded in the auction. His recorded bid is obviously higher than that of Soofan Das or Zahid Hussain Shah, the plaintiff. In fact, it is higher than Soofan Das and Zahid Hussain Shah taken together. Ghulam Jilani, the defendant No,5, had bettered all of them at the auction, through what he stands for now is shrouded in uncertainty. The highest and the second highest bidders have failed, though the second highest bidder with a very substantial bid of Rs,5,50,00,000, were the matter to be re-opened, could yet be considered, if interested and found genuine. ' Before proceeding in the ratter it will be useful to reproduce here the following provisions in sections 45, 53 and 54 of the Local Self-Government Ordinance, 1979 under which the defendants Nos. 1, 2 and 4 shall be deemed to have acted in the grant of a contract of the nature involved in this suit:- 45."Contracts. (2) (4) All contracts for transfer by grant, sale, mortgage, lease or otherwise of immovable property or any interest and right thereto or disposal or sale of movable property (or for leasing out rights to collect taxes) shall, subject to the rules be entered into after inviting offers in an open auction: ' Provided that if the highest bid is not accepted by the council, approval in writing of Government shall be obtained, and Government shall, in its order give reasons for not accepting the highest bid: ' Provided further that a council may with the approval of Government enter into a contract without inviting offers in auction. (5) ................................................ (6) Government may subject to the other provisions of this Ordinance, make rules laying down the procedure to regulate the making of contracts and the execution thereof. (7) No contract executed otherwise than in conformity with the provisions of this Ordinance shall be binding on the council." 53 (1) "Supervision over Ciuncils (2) .................................... (3) If, in the opinion of Government, anything done or intended to be done by or on behalf of a council is not in conformity with the law, Government may by order-- (a) quash the proceedings; (b) suspend the execution of any resolution passed or order made by the council; (c) prohibit the doing of anything proposed to be done; and (d) require the council to take such action as may be specified. (4) Where an order under subsection (2) or subsection (3) is made by Government, the council concerned may, within thirty days of the receipt of the order, represent against it in the prescribed manner, and the order made on such representation shall be final. 54. Power of Government to Give Direction to Councils-- (1) Government may direct any council, or any person or authority responsible thereto to take within such period as may be specified such action as may be necessary for carrying out the purposes of this Ordinance. (2) Where after due enquiry or otherwise Government is satisfied that any direction made under subsection (1) has not been complied with, it may appoint a person or persons to give effect to such direction, and may further direct that the expenses incurred in connection therewith shall be charge on the local fund and borne by the council."
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In the first place, it is obvious that the octroi contract involved in these proceedings is to be concluded in furtherance of an open auction alone. In the event of a regular public auction there appears to be no requirement of any confirmation from the Government, if the highest bid is accepted. However, on 5-5-1992 the Government of Sindh is shown to have issued a policy document requiring he submission of all auction papers before the formal award of any contract it would appear that in the unfortunate state of things, which prevails in the local bodies, Government could lawfully call for auction papers to ensure that no fraud or other malpractice was involved in the auction proceedings and remains be the highest bid, if any, was a genuine one, catering to public interest. If not, the Government could act in terms of sections 45, 53 and 54 of the Ordinance and recall the auction, ordering either a fresh one or an action in terms of the second proviso to section 54(4) requiring a negotiated contract, conducive to public interest. If, however, the highest bid received at an auction satisfied the requirements of law and justice the Government would be expected not to interfere and no confirmation from it would be required in allowing the concerned local body to proceed with formalisation of the contract. At all times, the Government and the councils are to act within the parameters of their respective authorities, none transgressing the sphere of the other. ' Now it is an admitted position that the defendant No,4-council did not submit the auction papers to the Government for its scrutiny, as required in the laid down policy 'and, in default of highest bid, proceeded to accord a negotiated contract without paying any heed to the Government policy which, at least in broad outlines, could not be considered to be contrary to law. To the same effect, defendant No,4-council did not even advert to the letter of…
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